Asian Journal of Economics, Business and Accounting

Against the backdrop of intensifying global market competition and China’s pursuit of high-quality development in manufacturing, the improvement of labour productivity has become a critical lever for firms to achieve sustainable growth. Using a sample of 32,914 firm-year observations of Chinese A-share listed companies in Shanghai and Shenzhen from 2011 to 2024, this paper empirically investigates the impact, influencing mechanisms and heterogeneous characteristics of artificial intelligence (AI) application on firm labour productivity with a two-way fixed-effects model and instrumental-variable estimation. The results show that AI application significantly improves firm labour productivity, and this finding remains valid after a battery of robustness and endogeneity tests. Mechanism tests indicate that AI empowers firm labour productivity primarily through optimising organisational management efficiency (lowering the management expense ratio); this channel accounts for most of the total effect. Although AI also increases corporate innovation output and firm digitalisation, these two factors do not significantly transmit the productivity effect in our sample. Heterogeneity analysis demonstrates that the productivity-enhancing effect of AI is more pronounced among non-state-owned enterprises, large-sized firms and enterprises located in Eastern China. By contrast, small- and medium-sized enterprises and firms in Western China have not yet fully reaped AI-driven productivity dividends. This study enriches research on the microeconomic consequences of AI and provides empirical references for firms and policymakers.